By TIOL News Service

MUMBAI, JAN 08, 2019: THE Appellant is availing of the benefit of SSI exemption Notification No 8/2003-CE in respect of the goods cleared by them. And in the matter of goods cleared under brand name of others they were paying the duty at applicable rate and availing the MODVAT/CENVAT Credit of duty paid on inputs.

The Department objected to such 'simultaneous availment' and issued a demand notice in respect of the own manufactured goods cleared under exemption during period September 2008 to August 2009.

The demand of Rs.3,88,595/- was confirmed and penalty and interest was imposed, which order was upheld by the Commissioner(A).

The appellant is before the CESTAT and submits that such simultaneous availment is permissible in view of the decision in Cure Quick Remedies P Ltd [Order no. 291-295/2010-EX(PB) dated 28 April 2010] and hence their appeal should be allowed.

The AR submitted that such simultaneous availament is not permissible in view of the decisions in Warana Packaging P Ltd. [Order no. A/89268/16/EB dated 10 August 2016] and U P Engineering Corporation - 2010-TIOL-906-CESTAT-DEL .

The Member (T) considered the submissions and after extracting at length the passages from the cited decisions also referred to the apex court rulings in Dilip Kumar & Co. - 2018-TIOL-302-SC-CUS-CB and in Ramesh Food Products- 2005-TIOL-07-SC-CX and concluded that there is no infirmity in the order appealed against and, therefore, the appeal is required to be dismissed.

The Member (J) referred to the various clauses in the SSI notification 8/2003-CE to examine the meaning of the term 'simultaneous availment' and inter alia observed thus -

+ A manufacturer is entitled to avail the exemption in respect of the first clearances up to a particular value of its own manufactured goods and is required to pay duty in respect of the branded goods right from the beginning.

+ As such payment of duty on the branded goods, by a manufacturer, who is manufacturing both the types of goods is not on account of any option to be exercised by the manufacturer but is by way of a legal obligation imposed upon him.

+ In my view, it is not simultaneous availment of exemption as also the credit inasmuch as the payment of duty on the branded goods after availing the cenvat credit is a part and parcel of the same notification by way of Clause-4 of the notification, without there being any option to the appellant.

+ The only option which the notification provides is that a manufacturer can either avail the exemption in respect of the first clearances or can opt for non-availment of exemption and pay duty on his goods (other than branded), in which case cenvat credit would be available to him.

+ If a manufacturer clears a part of his own final product without payment of duty and clears another part of his own manufactured goods on payment of duty and after availing cenvat credit, such a situation would admittedly amount to simultaneous availment of exemption as well as cenvat credit, which, of-course, the notification does not provide.

+ Where in terms of the same notification a manufacturer is under a legal obligation to clear the branded goods on payment of duty, the benefit of exemption available in terms of the precedent paragraphs of the notification cannot be taken away from the manufacturer.

+ Such an interpretation would lead to making the said notification as infructuous or otiose vis-a-vis the goods manufactured by a manufacturer on its own account. An interpretation which deviates from the legislature intent and leads to absurd results, has to be avoided.

+ Central Excise Authorities cannot control the Business plans of a manufacturer.

The decisions cited by the AR were distinguished and those by the appellant were relied upon.

The Member (J), therefore, concluded that the appeal is required to be allowed with consequential relief by setting aside the impugned order.

And, therefore, in view of the difference of opinion, the matter was referred to the President for a decision by the Third Member.

In passing - unproductive: Please refer to Board letter(s) F.No.21/1/2006-CX.I dated 6 th October 2006 and 19 th January 2009 and the dismissal of Revenue appeal by Supreme Court in Nebulae Health Care Ltd. - 2015-TIOL-261-SC-CX .

(See 2019-TIOL-95-CESTAT-MUM)